BHP Investment Put Spotlight on Australian Shale Juniors
While shale gas development is in its infancy in Australia, releasing gas by horizontal drilling and fracturing shale is predicted to eventually supply 45 per cent of the US gas market.
The revolutionary concept at a time of rising world energy prices mirrors the rapid development of coal seam gas in Queensland and NSW.
Shale gas exploration is seen as a way for Europe to reduce its dependence on Russian gas imports. China has stated its plans for significant investments in unconventional gas which includes shale gas, tight gas and coal-bed methane.
Similar developments could occur in Australia once domestic gas prices are high enough.
Some smaller companies are hoping to benefit from the development of unconventional gas reserves. Mostly, they hold exploration and production rights to existing onshore oil and gas basins, given that shale gas is usually found underneath existing conventional gas basins.
At the top of the list are Santos and Beach Energy, which together speak for large areas of the Cooper Basin.
Beach chief Reg Nelson has been particularly aggressive, funding pressure and fraccing tests on Lakes Oil's unconventional sandstone "tight" gas play in Gippsland together with associated company Somerton Energy.
Reg is also keen to exploit the potential of shale gas in the Cooper Basin, given the gas pipeline network already in place.
The comfort for investors comes from Santos and Beach's existing and highly profitable oil and gas production.
At the smaller end of the scale, Somerton Energy and Lakes Oil hold interest on the basis of their unconventional gas potential. Somerton's sparely tested leases in the Otways could be particularly interesting.
AWE Ltd has the benefit of very promising conventional and unconventional gas acreage in the Perth Basin, a big positive given Western Australia's high domestic gas prices.
Further north, Buru Energy is looking for gas and oil in the Canning Superbasin which has been lightly explored.
Alcoa has prepaid Buru $40 million for the delivery of up to 500 petajoules of gas if it is successful.
Central Petroleum has a 270,000sq km position across central Australia's Amadeus Basin.
A recent independent report commissioned by Central estimated a mean prospective recoverable resources of 26 trillion cubic feet of gas and a billion barrels of oil in the basin -- though finding and extracting it economically is another matter entirely.
And it could be a long time before any of the above noted know exactly what they are sitting on.
Source: Herald Sun